Employee Benefits Compliance

Surprise Medical Billing Interim Final Rules Include Model Notice; Addresses Future Guidance

The Departments of Health and Human Services (HHS), Labor and Treasury (collectively “Departments”) released the Interim Final Rule (IFR) “Requirements Related to Surprise Billing; Part I”. This rule, scheduled to be formally published on July 13, 2021, is the first round of sub regulatory guidance written in response to the No Surprises Act passed as part of the Consolidated Appropriations Act of 2021 (see Leavitt Group article for full details on the No Surprises Act). The Act establishes protections from surprise medical billing and excessive cost-sharing for plan participants receiving certain health care items and services. These new requirements apply to group health plans, insurance carriers and medical providers, along with air ambulance providers. These rules are effective for plan years beginning on/after January 1, 2022.

Summary of Interim Final Rule

This IFC protects individuals from surprise medical bills for emergency services, air ambulance services provided by out-of-network providers, and non-emergency services provided by out-of-network providers at in-network facilities in certain circumstances.

If a plan or coverage provides or covers any benefits for emergency services, this IFC requires emergency services to be covered:

  • Without any prior authorization (i.e., approval beforehand).
  • Regardless of whether the provider is an in-network provider or an in-network emergency facility.
  • Regardless of any other term or condition of the plan or coverage other than the exclusion or coordination of benefits, or a permitted affiliation or waiting period.

Emergency services include certain services in an emergency department of a hospital or an independent freestanding emergency department, as well as post-stabilization services in certain instances.

This IFC subjects the following providers to limitations listed below.

Providers Subjected to the IFR

  • Out-of-network emergency services;
  • Air ambulance services supplied by out-of-network providers; and,
  • Certain non-emergency services furnished by out-of-network providers at certain in-network facilities, including hospitals and ambulatory surgical centers.

No Surprises Act IFR Limitations on Providers

  • Limits cost sharing for out-of-network services subject to these protections to no higher than in-network levels;
  • Requires such cost sharing to count toward any in-network deductibles and out-of-pocket maximums; and,
  • Prohibits balance billing.

Applicability

The regulations are generally applicable to both grandfathered and non-grandfathered group health plans and health insurance issuers for plan and policy years beginning on or after January 1, 2022. Applicability includes grandmother plans and transitional indemnity plans without a network. These rules do not apply to Health Reimbursement Arrangements, excepted benefits, short-term, limited duration insurance and retiree-only plans.

Calculations of Cost-Sharing Provided Out-of-Network

Emergency services provided by out-of-network emergency facilities and out-of-network providers, and certain non-emergency services furnished by out-of-network providers at certain in-network facilities, must be calculated based on a “recognized amount”, which is generally the lesser of the “Qualifying Payment Amount” (QPA) – the plans median in-network rate for the item or service; or, an all-payer model agreement between CMS and the state.

When Plan determines that the QPA is the recognized amount, additional details about the QPA must be provided, including the Plan contact information needed to initiate the 30-day negotiation period for the plan total payment. If agreement cannot be met, Independent Dispute Resolution may be initiated. The IDR process will be described in future sub regulatory guidance.

Air Ambulance

Cost-sharing amounts for air ambulance services provided by out-of-network providers must be calculated using the lesser of the billed charge or the plan’s or issuer’s qualifying payment amount, and the cost sharing requirement must be the same as if services were provided by an in-network air ambulance provider.

Balance Billing

Under this IFC, surprise billing for items and services covered by the rule generally is not allowed. Services include nonparticipating providers and facilities, air ambulance services and out-of-network providers for emergency services.

Determining Out-of-Network Rates

Under this IFC, the total amount to be paid to the provider or facility, including any cost sharing, is based on:

  • An amount determined by an applicable All-Payer Model Agreement under section 1115A of the Social Security Act.
  • Specified state law.
  • An amount agreed upon by the plan or issuer and the provider or facility.
  • If none of the three conditions above apply, an amount determined by an Independent Dispute Resolution (IDR) entity.

Plan must pay an initial amount to the nonparticipating provider or provide a Notice of Denial within 30 days after receiving all information necessary to decide a claim for services. This initial payment is not a first installment rather payment in full. How to set minimum initial payment amount was not described in these rules but noted for future consideration.

The Departments intend to issue regulations soon regarding IDR entities and the IDR process.

In limited cases, a provider or facility can provide notice to a person regarding potential out-of-network care, and obtain the individual’s consent for that out-of-network care and extra costs. However, this exception does not apply in certain situations when surprise bills are likely to happen, like for specified ancillary services connected to non-emergency care, such as anesthesiology or radiology services provided at an in-network healthcare facility.

Notice to Consumers

This IFC requires certain health care providers and facilities to make publicly available, post on a public website, and provide to individuals a one-page notice about:

  • The requirements and prohibitions applicable to the provider or facility under Public Health Service Act sections 2799B-1 and 2799B-2 and their implementing regulations.
  • Any applicable state balance billing limitations or prohibitions.
  • How to contact appropriate state and federal agencies if someone believes the provider or facility has violated the requirements described in the notice.

The IFR included a model notice that explains all of the benefits of the No Surprises Act. This notice must be provided beginning in 2022 requiring a plan or carrier to disclose the prohibition on surprise billing and which entities to contact in the event the No Surprises Act is violated.

Exceptions

Non-emergency services provided by a provider that does not participate in the network facility are generally exempt from the balance billing and cost-sharing protections if satisfying advance notice requirements and obtains patient consent.

  • provider relying on notice and consent exception must timely notify the plan or carrier, and
  • provide a signed copy of any binding notice and consent documents

Conclusion

In most cases, calculations and notifications will be taken care of by the insurance carrier and out-of-network providers submitting claims and receiving notice and consent. For self-funded plans, plans should ensure compliance with these rules and coordinate with their Third-Party Administrators and carriers. These are interim rules and could change in the final version expected out by the end of the year, but provide the opportunity to start planning for the January 1, 2022 plan year.

Visit https://www.cms.gov/files/document/cms-9909-ifc-surprise-billing-disclaimer-50.pdf to read more about the interim final rule.

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